Sun Lee Importers has a cost of debt of 9 %, a cost of equity of 14 %, and a cost of preferred stock of 10 %. The firm has 87,000 shares of common stock outstanding at a market price of $27 a share. There are 30,000 shares of preferred stock outstanding at a market price of $41 a share. The bond issue has a total face value of $750,000 and sells at 99 % of face value. The company's tax rate is 35 %. What is the weighted average cost of capital for Sun Lee Importers?
Multiple Choice
12.00 %
11.89 %
11.93 %
11.38 %
11.46 %
Sam's Souvenir Shop has an after-tax cost of debt of 8 %, a cost of equity of 12 %, and a cost of preferred stock of 9 %. The firm has 116,000 shares of common stock outstanding at a market price of $24 a share. There are 51,000 shares of preferred stock outstanding at a market price of $38 a share. The bond issue has a face value of $900,000 and a market quote of 105. The company's tax rate...
CTO Transport has an aftertax cost of debt of 5.6 percent, a cost of equity of 13.7 percent, and a cost of preferred stock of 7.8 percent. The firm has 60,000 shares of common stock outstanding at a market price of $45 a share. There are 12,000 shares of preferred stock outstanding at a market price of $52 a share. The bond issue has a total face value of $400,000 and sells at 102 percent of face value. The tax...
Turner’s pharmacy has a rate of equity of 9.5%, a rate of preferred stock of 8.25%, and a rate of debt (before tax) of 7% percent. They have 100,000 bonds outstanding with a face value of $1,000 each, selling for 95% of face value. They also have 2,000,000 shares of common stock outstanding with a current price of $37 a share. There are 45,000 shares of preferred stock outstanding at a market price of $41 a share. The company's tax...
19. A firm has a cost of debt of 6 percent and a cost of equity of 13.7 percent. The debt–equity ratio is 1.02. There are no taxes. What is the firm's weighted average cost of capital? 20. Hotel Cortez is an all-equity firm that has 5,500 shares of stock outstanding at a market price of $15 per share. The firm's management has decided to issue $30,000 worth of debt and use the funds to repurchase shares of the outstanding...
13.24 WACC: The Imaginary Products Co. currently has debt with a market value of $300 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,440.03 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $12.00 per share. The preferred shares pay an annual dividend of $1.20. Imaginary also has 14 million shares of common...
Miller Manufacturing has a target debt-to-equity ratio of 0.60. Its cost of equity is 14 percent, and its cost of debt is 8 percent. If the tax rate is 38 percent, what is Miller's WACC? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) WACC % 6.66 points Raymond Mining Corporation has 9.3 million shares of common stock outstanding, 370,000 shares of 6% $100 par value preferred stock outstanding, and 159,000 7.50% semiannual bonds outstanding, par...
Please show how to solve PRETAX COST OF DEBT using the YIELD FORMULA. That is the only thing I need. thank you Task 2: Weighted Average Cost of Capital (WACC) 01/01/00 01/21/00 50.000 8.5% 1.000 20 1.040 1 Input 2 Debt 3 Settlement date 4 Maturity date 5 Bonds outstanding 6 Annual coupon rate 7 Face value (5) 8 Coupons per year 0 Years to maturity 10 Bond price ($) 11 Common stock 12 Shares outstanding 13 Beta 14 Share...
Assume the market value of Mercks' equity, preferred stock, and debt are$6 billion, $2 billion, and $13 billion, respectively. Merck has a beta of 1.7, the market risk premium is 8%, and the risk-free rate of interest is 3%. Merck's preferred stock pays a dividend of $4 each year and trades at a price of $30 per share. Merck's debt trades with a yield to maturity of 8.0%. What is Merck's weighted average cost of capital if its tax rate...
2. Use the bulleted information below to find: a. Cost of debt b. Cost of equity (use CAPM) c. The current stock price (use DGM) d. Total market value of equity e. Total market value of deht f. WACC • The firm has 30 million shares of common stock outstanding. The beta is 2. The firm most recently paid a $5.50 dividend and plans to increase dividends by 2% per year indefinitely The expected return on the market portfolio is...
Western Electric has 25,000 shares of common stock outstanding at a price per share of $57 and a rate of return of 14.2 percent. The firm has 7,000 shares of 7 percent preferred stock outstanding at a price of $48 a share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $350,000 and currently sells for 102 percent of face. The yield-to-maturity on the debt is 8.49 percent. What is the...